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tv   Street Signs  CNBC  May 17, 2012 2:00pm-3:00pm EDT

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mode as facebook of course prices later on this afternoon. tomorrow on "power lunch," david of greylock partners is the guest. he's inside facebook headquarters today. i'll be in menlo park for "squawk on the street." "street signs" starts right now. and it is all about that california-based company, not facebook this hour, it is apple. apple has been the horse pulling the cart all around. right now it is lying down on the job. so will the apple cart continue to tip? or is this one great big buying opportunity? we'll debate. stocks chasing jpmorgan but going in the wrong direction. the losses from the trade growing calls for jamie dimon to explain how this happen. continue, what is next, we'll debate. and is walmart the best piece of hopium we have heard in a while for the american economy? and forget bag and reservation charges, the cash cow and cabin
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is boosting the bottom line for the airlines. we will tell you the truth about the airline fee frenzy, mandy. >> another negative session for the major averages, brian. the dow heading for its 11th drop in 12 sessions. the s&p not doing much better heading for a tenth drop in 12. all three major averages could close at their lowest levels since january. a few sobering stats for you. check this out. the dow did hit a four-year high close on may 1st. since then we are down around 730 points or about 5.5%. the upside though we're still up about 2.5% for the year. no wonder bullish sentiment nonetheless is at a two-year low. let's get straight down to the floor of the nyse. bob, i know we've been doing a lot on facebook and i know a lot of traders are coming up to you saying bob, why are you so skeptical about facebook. skeptical you may be, but at the same time am i right in thinking we still want this to succeed for a very specific reason. >> i want it to succeed because i want every mom and pop that's going to buy it tomorrow to make money on it.
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i don't want them to be angry and bitter three months from now that it's 25% below that. that's why i want it to succeed. but i'm a little skeptical. i'm worried about the fact that we're going down 50 points every day in the dow every day this month. look at this. look at these companies that are in correction territory. even down more than 20%. the banks are down more than 20%. caterpillar's having a terrible couple of months. apple is down 15%. chevron -- by the way, apple just dropped below $500 billion in market cap. kind of worrisome there. >> absolutely. we'll talk more about apple in just a second. interesting you mentioned cat. a lot of that is the slowdown in asia. thank you, bob. over to you, brian. >> this continues on what bob was talking about, right. he mentioned apple. but it's not just them. overall lately, guys, tech has certainly been a wreck. the tech sector down again today. and the s&p technology index has been down for 11 straight sessions. coming up craps, right? and giving up more than 7.5% of its value.
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but, as bad as that is, it's actually been even worse, yes, for apple. that stock is down more than 17% from its all-time high hit back on april 10th. this equates to a $110 drop in share prices in a little more than a month. and as our good friends at spoek investment group tweeted out, apple has lost about $104 billion in cap, or the equivalent of what we expect facebook to be valued at in just a little over the month. wow. but before we go into full out panic mode, do keep in mind that the nasdaq is still the best major performing index this year. it is up about 9% even with today, mandy. >> but, brian, perhaps the bigger question here for investors is, is apple's run done? take a listen to what was said on our air last month as april rocketed towards its all-time high. >> it's not there yet. but if the stock needless to say the $650 per share level, then
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suddenly a group of sellers comes in that hasn't been there yet, and that could take the market by surprise. >> fair enough. >> well, let's bring in the man who made that bold call. he is head of research at lewis capital markets. we're also joined by a bull, tavs mccord. great to have you back. we heard what you were saying back then, and you're staring down the barrel of what, $450 for apple? really? >> yes. well, initially what happened was with apple once it reached its stop, it started to underperform heavily in the market. since the beginning of may it's not necessarily underperforming the market anymore, it's just basically going down in line with the market. >> so you think it's more to do with market weakness as opposed to apple fundamental weakness, is that what you're saying? >> yes. the u.s. consumer related stock became some sort of a safe haven. this is why retail outperformed so much. because they were insulated from europe, from china slowdown, for
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all the calamities that took place in the world. now, retail is down heavily today. it's starting to -- succumb the u.s. consumer. and that could also spill over to apple. i believe that the consumer rolling over is the straw that breaks the camel's back. what could bring apple down to this base level of say $450 a share? it is that the overall market gets rolls over. >> tavis, if people liked apple at $600 a share, shouldn't they love it at $535 a share? >> yeah. obviously it's been a tough tape especially in the last month. and i agree a lot with what was just said, but the reality is even through a really bad consumer spending environment in '08 and '09, this is one of the few companies that was able to grow earnings extremely significantly, roughly $6 in
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'08, $8 in '09. this is when the vast majority of s&p earnings were getting cut by 50%, 60%. >> we heard during apple's run-up that it was bigger than the market, it was a beast unto itself and immune to everything else. it doesn't look like it now. what has changed? >> it's a bit of a strong man argument. i'm not sure who was saying that. nothing's changed. it is the market. it's the single most widely held stock i would imagine and certainly in growth portfolios. so if you're going to have a market downturn, you know, of course it's going to go down. i think over the next two or three months, you know, we'll see where the market comes out. but as we look towards the back half of the year and the iphone 5 specifically over the longer term earnings are what drive stocks. and relative to the vast majority of tech stocks out there, apple has a much better chance of growing its earnings pretty significantly over the next 12 to 18 months. >> even notorious short seller david einhorn said just last
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night he wouldn't be surprised because apple is such a strong company worth $1 trillion. how would you counter some of the bullish arguments that he just made for apple? >> like i said before, apple is a great company. i think they have a very strong lineup. one thing i think is a cloud on the horizon, i call the cloak or vail of vanity, the halo-effect, the david that fought against goliath, the powerful pc, and apple was the small guy sneaking up. >> has that baton rightly or wrongly been handed over to facebook, do you think? >> i don't want to go that far, but what i do know is apple is now the big guy in the room. apple is no longer the david but has become the goliath. how does it manifest itself? the department of justice is attacking apple now for the e-books. verizon and at&t are concerned
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about the apple and google in the smartphone market. what are they doing? they're starting to promote a windows based operating system with nokia. is it a good operating system? i think it's probably -- but they do not want an -- they're going to subsidize these handsets. it's waiting in the wings and partially weighing on the stock of apple right now. >> is there any way facebook is hurting apple? retail investor putting an order by facebook, if they don't get it, could they put it back into apple? is there any facebook effect on aapl? >> i haven't done the math and the volume of late. i suspect the amount of dollars trading in apple everyday would dwarf any kind of tactical decisions by retail investors in and around a facebook ipo. but i would like to address the previous comment because i think although your other guest is correct that apple's in a very different position now than it has been historically in terms of market power, there's also something powerful happening
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here in terms of apple ecosystem. what apple is becoming with this ios operating system and the application developers that write to it is very similar what happened to microsoft with windows back in the '80s. this is a very difficult thing to break for competitors. it's not as if windows was the greatest operating system throughout most of that time period, but that's where the applications were. and therefore that's where the consumer spending went. i think that's going to be difficult for competitors to break into. and as long as that cycle exists, i think apple's earnings will continue to grow rapidly. >> you're sticking with a price target of $800. thank you very much robin and tavis. from apple to a company that sells probably billions of apples, the fruit, every year. walmart, the world's biggest retailer trading higher on beating both top and bottom line. is this a sign that the economy is in better shape than we think? or a contrarian call as people trade down and will closely watch their wallets? joining us is senior portfolio
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manager at gradient investments. mike, is walmart a contrarian bet on the economy? or a bet on the economy? >> well, i think it's both. you look at walmart and you look at this past quarter. and what happened here, i mean, walmart beat on all metrics. and they're really coming into their own. they beat on sales. they beat on earnings. they beat on margins. they're buying back stock. they're paying a nice dividend. you look at all those things, walmart's firing on all cylinders. why? i think the consumer is challenged and i think the consumer is really looking for value. i think when they do that, their challenge need of value they go to walmart. what's good for walmart in the general environment that they would do well in may not be good for the overall retail environment in itself. >> mike, you don't currently own walmart. what would make you buy it? >> well, i think after seeing this quarter, i mean, a retailer has a montra, let's drive sales. and walmart didn't do that for a long time. now, the last three quarters they have driven sales in the
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u.s. especially this last quarter. that comp store sale number of 2.6% was a good number. i mean, that really surprised investors, i think. and you're seeing the reaction in the stock today. we don't own it. i think after seeing this quarter, after seeing the trends, after seeing how their strategy shifts are playing out, i think it's one we would consider buying if it dipped below 60. i don't think we want to buy it on the pop today, but if it dips below 60, we would consider owning this stock. >> got it. mike, thank you very much for joining us. >> thank you. >> let's get to steve liesman with breaking news. what do you have, steve? >> what we've learned with growing concern over resur gent european financial crisis, brian, president obama will use his time with g-8 leaders this weekend to urge europe to use the tools its created to handle financial problems using aggressively and remain firmly on the road to a more resilient euro area. europe is taking on new urgency for the white house as the elections draw near. with a still teetering u.s. economic recovery, among the keys to the weekend it will be the first meeting of global
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leaders with french president francois. it's going to take time to work out that key german-franco relationship. they're not expecting concrete results from the weekend. and they do see a long road ahead, we're told. officials say the europeans have better tools, like the $500 billion firewall they created to deal with financial problems and recapitalizing their banks, but they think it's a matter of political will to use them. the administration has long maintained it's within the ability of europe to solve its problems. the president will meet with g-8 leaders this weekend, g-20 leaders next month is the main forum for addressing global financial issues. the officials are looking to the euro meetings of leaders next week as well. brian. >> just real quick question for you here, steve. okay, so president obama is going to try to urge the european leaders to basically get their act together. is there anything that the u.s. could do to help them in this situation? is there anything that they should be doing? >> that's a good question,
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mandy. and i think the answer is no because there's a point at which the u.s. doing anything is seen as interference. i think what they're trying to do is say, look, you guys have the tools, you've had the tools to solve this problem. use them and get over some of those political constraints. it would be different if the administration saw this as financial constraints, but the message i'm getting is it's more political than it is financial. they have long maintained they don't need imf help, doesn't need u.s. help. it's a matter of gathering the wealth in europe to solve financial problems. >> steve, point understood. >> backing off a little of the hope there. thank you, on deck, a stock that's gone from $91 to under $2 in just over four years. >> yeah. from here to zero. plus the great unknown. how much didn't we or don't we know about the mess at jpmorgan? just how much more will the firm lose? are they telling the whole truth? we're going to debate that coming up next.
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do check out memc, electronic materials. ticker is wfr. the stock down more than 20%. the cfo depart and had this is part of the total solar flareout. this company builds chips for solar panels among other things. that stock $1.69. this was a $91 stock just four
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and a half years ago. and there's a random chart of barnes & noble. we like to add things. >> we have a market flash with brian shactman. >> thank you. actually, i wanted that barnes & noble shot. listen, an amended 13d from funds basically that he's distributing inkind common shares owned means he's giving them payment for something else but in effect reducing his stake. as of last may that stake was just a shade under 20%. the stock getting hit hard down more than 11% after this news broke. back to you. >> it was a shade? >> just a shade -- >> shade. >> 19.74% is a shade under 20%. >> i thought you were going somewhere else with that. >> jpmorgan's trading loss may be much bigger than previously thought. news today that the nation's largest bank may have lost about $3 billion. jpm shares are down another 3%
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on change. what do we not know and how many billions more will be lost before it's all over? let's ask jim, author of" currency wars," our very own kate kelly on deck and very feisty rick santelli. jim, i'm going to get to you. you are saying jamie dimon should resign over this. why, exactly? >> jamie dimon should resign as a point of honor. he's lost our trust. the banking business is unstable at the best of times. just the asset liability nature of banking, that's the best case. leave aside this kind of trading. need trust, stability, we have the london whale, how do we know there's not a hong kong wahale - >> but what would that achieve? >> he says the losses are m coing out of earnings.
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those are american investors. from a transfer of savers to banks because of zero interest rates. the least the banks could do is treat the 500 billion with some respect and not take it to las vegas. this is a spread trade. not every trade with two sides is a hedge. this trade is two sides, it's going like this, but it's not a hedge. both sides are synthetic. there's no reason for this trade on. it's a violation of trust. it's actually a disgrace and jamie dimon should resign as a point of honor. >> i think there was something of proprietary trading rather than good old fashioned hedging. here's what i understand about the scope of losses and time frame we're looking at. "new york times" now saying they lost $3 billion and not just the original two announced late last thursday. i heard on friday the market was moving against jpmorgan in terms of what it perceived the trade to be. now, the bank of course hasn't confirmed what the trade was for obvious reasons they need to unwind it.
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but based on a lot of informed speculation sort of a three-part trade that involved sort of being bullish on corporate debt and trading this index that, you know, bet against corporate debt and a bunch of different strategies they had going simultaneously. you know, it seems as though the market is trying to hold jpmorgan's feet to the fire and make sure that they have mounting losses. and, you know, i think people even close to it wouldn't rule out that this could end up costing them $4 billion, $5 billion, $10 billion at the end of the day. having said that, let's take a quick lesson to what jamie said last week. he's saying basically he would hold onto these positions for years if that's what it would take for them to avoid getting their faces ripped off on the exit. >> do something stupid willing to hold necessary inventory and willing to bear volatility. therefore the volatility for the rest of this quarter and next quarter, so will be fine. it could cost us as much as $1 billion or more. obviously we're going to work hard to have that not be a negative at all.
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it is risky and will be for a couple quarters. >> he's not ruling out it could end up being $3 billion. it could be significantly more. >> that's spoken like a guy who's never seen a spread chart go in his face. >> rick, without getting too in the weeds about this trade, right, and i understand they lost and they may lose more, it's very synthetic very complicated trade, a long bet on corporate debt. it was basically a hedge on an index. a derivative on a bizarre traded index. they lost. they got their butts handed to them and maybe they're going to keep getting it handed to them. you're in the pits where men and women, trade, win and lose every day for a living, right? is there any bigger thing we can take away from this about trading, the credit markets or anything? don't bet? >> no. and you know what, i'm sorry. all the people out there that want to put morality into trading, i understand, but that's not where it goes. and people down here, if they know you're stuck on an error, they're going to press the market. that's the way the game works. now, before and after the bell,
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the morality and the friendships exist. jamie dimon, that statement he made, he'll hold it as long as he has to, i'm not buying an inch of that. they know the position. these are mostly bilateral relationships. you're having to go back to the same well you pulled the water out in the first place -- >> yeah, but, rick, you can't sell unless there's a buyer. it sounds like the people that are stacked on the other side to turn this screw into jpm have no interest in taking the other side of that trade anymore. and they're just going to wait. >> right. keep in mind, as he waits there are implications for the potential direction of europe and how it affects corporates. there's equity issues going on that will affect the outlook for high yield. all of this can get very nasty. we're not even talking about all the issues of how he may have options wrapped around this derivative to try and control it. now he has volatility risk. and if he's short volatility, it's very difficult to hedge that. just keeps getting worse and worse. >> and, jim, you can't call for the resignation for jamie dimon
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without giving an alternative solution. >> i think matt zen would be good. i want to put morality into banking. if this weren't a hedge fund, i could careless. who cares. it doesn't belong in a bank. that's the point rick is missing. as far as jamie dimon's statement, this is not just jpmorgan against the hedge funds, there's a third player at the table which are the regulator, the fed, the fedocc,e european regulators. >> the fbi and doj in this case. >> correct. they may be forced out of this trade. he's saying -- >> by the way -- >> yes, rick. >> i once again disagree with you. who's going to decide the morality banks should have? congressmen in washington? you know, the issue is to insulate the taxpayers. i totally agree with that. but what banks want to do once taxpayers are insulated, i don't think anybody has the right to live in a glass house and be their conscience. let them sink or swim on their
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own morality or lack therein. >> i believe in free markets. there's nothing free market about a bank. liabilities are insured by the fdic, propped up by taxpayers with zero interest policy. you and i agree on that, rick. if you want to talk about free markets, get rid of the insurance bring it on. >> i'm with you. >> we have to leave it here. rick, jim, kate, thanks very much for playing. still to come, a four-star fund manager delivers a hot trade. >> and also in the menu, gluttony. why counting calories simply doesn't matter most major chain restaurants, you're not going to believe the stat we are going to throw at you when "street signs" comes back.
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is facebook overhyped? >> facebook euphoria. >> facebook ipo. >> everybody i know is big with facebook. >> facebook, facebook. >> you're going to be hearing about it more than you want to. >> facebook. >> and mark zuckerberg. >> facebook, facebook. >> facebook fever going on. >> should i buy facebook? >> i don't know about facebook. >> facebook. >> facebook. >> facebook. >> no, not facebook. >> mr. buffett had some
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interesting things to say. >> facebook. >> facebook. the proverbial f word. we are counting down to the big moment when facebook prices its ipo. stay with cnbc for continuing coverage on "closing bell," "fast money" and there's more at this story on the dark side of facebook. another market flash now however with brian shactman. please don't let it be facebook, brian. >> it absolutely is not. listen to the headlines out there. chinese ruling guilty of dumping solar panels into the u.s. market. that is a source. look at the price action first in first solar. it's popping. it's up 8% plus. of course very much beaten up stock, but that's still a big move. on the flip side, look at a chinese solar company like yge and the absolute opposite move. down 11.3%. we don't know whether the impact
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will be long-term, whether they're going to limit chinese solar panels from coming into this country? i don't know. clearly people are trading on this. back to you. >> thank you very much, brian. >> that is interesting considering we showed you electronic materials earlier. that's a play on that trade as well. time for our disaster du jour. it's not a solar company. it's a biotech. this is dendreon. traders favorite long and short. the stock is down about 10%. last night it was announced the s.e.c. is opening a formal investigation into the company semiing from lawsuits allegedly that they misled investors about their cancer drug. suits claim dendreon made misleading statements about the market launch of that drug. that stock down 81%. >> oh. >> yeah. i'm not trying to be like, you know, mr. rain today, but we've had some just gigantic moves from some hot or traded stocks in the last few months. >> disaster du year.
2:30 pm, the all things china travel website is up 8.5% today on its earnings. shares were also boosted by an upgrade from hold to sell by raymond james from underperform to market perform. the stock is down, however, about 50% over the last year. all right. up next, how m.i.a. meat eaters have appetite losing for one big fast food chain. >> and airline fees are still sky high. if you think you've seen the last of them, just wait, folks. just wait. "street signs" is back in two. [ engine turns over ] [ male announcer ] we began with the rx. [ tires squeal ] then we turned the page, creating the rx hybrid. ♪ now we've turned the page again with the all-new rx f sport. ♪ this is the next chapter for the rx and the next chapter for lexus. see your lexus dealer.
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street talk time. let's talk some street and check out some stocks on the move. first up we have advance auto parts. >> this could have been our disaster. same store sales came in at half the street's estimates. eps missed. deutsche bank downgrading to a hold from a buy. >> this is a stock we were talking about only recently, gamestop also hurting. >> yes. first quarter net also down about 9.8%. gamestop down about 30% for the past year. >> those feeling hungry, maybe want a few calories, red robin gourmet burgers. >> fewer people are wanting those calories because customer
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traffic at rrgb down in march and april. it grew 0.5% but consensus was 2.3% growth. stern ag saying it's going to be a traffic driver. the blue ribbon burger, 1,041 calories. that's it, baby. 58 grams of fat without the fries. i'm in. >> it looks like those are fries actually stacked inside the burger itself. >> no. they're onion rings. >> oh. another one we were looking at the other day. patriot coal. >> there's no news other than a price cut from 4 to 9 at fpr. thanks, guys. we're bringing it up because this stock is down 84% over the past year. this is a huge american industry. i know a lot of people out there don't like it for environmental reasons, destructive, tough, it's one of the most dangerous jobs in the world. but we are witnessing the equity destruction of an industry and i think it merits more attention. >> absolutely. we're going to end on a high note. it's a pity herb greenberg is
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not here as well. turnaround story, sears. >> yeah. look at sears. up 5% on a down day. the company swung to a profit of $1.78 a share. they lost money in the same quarter last year. they're going to spin-off a chunk of their canada unit, sears canada. be careful on that eps though because everybody noting that most of the eps gains came from asset sales, not from organic earnings growth. still, stock up 5%. little bit of a short squeeze, took into consideration according to jim cramer. >> down about 29% over the past year. in the meantime gold is having its best day of the year. let's get inside the headlines. the glittering headlines, sharon epperson is down at the nymex. sharon, what's behind that move? >> this $40 move in gold, amanda, shows there's been a decoupling here between gold and other risk assets during the selloff that we've seen pretty much across the board in energy and metals, we had seen both gold and oil trading in tandem. now what's changed? well, traders say there is a cautious flight to quality. that philly fed manufacturing data big surprise there. big plunge there showing the
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weakness we have in this country. the continued concerns about the contagion effects in europe. all of that is causing what we're seeing here as a safe haven trade here now in gold flooat least for the moment. we are looking at the best one-day performance in gold. oil prices continue to fall. looking at below $93 a barrel now for wti. we're also looking at below $108 a barrel now for that july contract for brent and the premium between brent and wti seems to have come in quite a bit. keep in mind the seaway reversal is in effect. the flows should begin this weekend. >> sharon epperson, thank you so much for that. that's significant. china now the biggest global consumer of gold as opposed to india, which has always been the biggest consumer of gold. >> there is a buyer out there. a lot of lom bamborghinis in ho kong. >> a lot. >> they sound good going three miles an hour. speaking of commodities, your next guest says they are underappreciated right now.
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co-portfolio manager at eagle asset management joining us now. you sound like jim rogers, eric, saying they're under appreciated. maybe they are. are they underpriced? >> we're going through a digestion period here where we are seeing some concerns over the macro environment that are very, very legitimate. but at the same time we've already peeled off $20 in the price of wti. and we've actually seen some really encouraging signs from the u.s. market here where we're seeing, you know, year over year demand growth once again returning where we've got obviously prices at the pump have pulled back nicely from just under $4 to now $3.75. so we're seeing some resurgence in demand. i think that that can lend support to oil at these prices. >> it's interesting, too, eric, because natural gas quietly has gained about 35% in a matter of weeks. still historically a cheap price, but it has come up pretty good. >> natural gas is clearly at levels not sustainable. >> on the downside. >> yes. absolutely. >> okay. do you believe the price is going up? what stocks are going to benefit
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from that? >> certainly you've got southwestern energy would be a great play on that. cabot oil and gas out of the northeast quadrant of the marseilles shale. that's pretty much your lowest cost producer. clearly a survivor in this environment. when you look at the overall natural gas rig count having completely collapsed, you've seen great signs of switching utilities from coal to gas. so you've got demand coming on. you've got supply coming in. and, you know, the setup is really to return at least to a $3 level. which would also benefit the coal producers as well at that point. >> we've talked a lot about the home improvement trend craze that seems to be going on again. and you think lennox is a play on that. >> we got good data yesterday on housing starts. they make air-conditioning units. really, the main story for them is the replacement market where we've been running well below what you would consider to be normalized replacement, these
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units usually last 10 to 12 years. what we've seen recently is the consumer going out and putting duct tape on whatever they can to keep them going. obviously a tough economic environment. but that game is really running out. as we see housing starts recover, you'll see that leg of the stool kick in. >> are you worried about the discounting? i'm in a market for an air-conditioning unit. my family has a problem with it being 95 degrees in the house. it's been that way for two years. i'm finally going to bite the bullet. how can they make any money if they're offering me $2,000 back? >> that's a good point. a competitive market for sure. what drives the margins are energy efficient units. i would encourage you to consider what's going to be the most energy efficient for you because obviously there's going to be longer term cost savings for you and it's going to benefit them as well. if you look at their first quarter results, their sales into the new unit residential market up 40% year over year. that's pretty strong growth.
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that shows you what a low base we're coming off of. but, obviously, this right now this time of the year is the seasonally important point of the year for them. if temperatures start to rise, we can do a lot better. >> my 8-year-old needs to toughen up. >> send her to australia for a while. >> scorpions, giant snapping turtles, dinosaurs, everything. >> kualas, they're scary. >> and delicious. >> and delicious according to mark zuckerberg. anyway, if you're going out to eat tonight, we're going to find out which is worse for you, the appetizers or entrees? >> also ahead, darren rovell who loves to eat and drink is in beer heaven. and behind the wheel at msg -- that doesn't sound like a good combination. you're going to see what d-ro got to do. there it is. we're back after this.
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so why exactly should that be of any interest to you? well, in that time there've been some good days. and some difficult ones. but, through it all, we've persevered, supporting some of the biggest ideas in modern history. like the transatlantic cable that connected continents. and the panama canal that made our world a smaller place. we supported the marshall plan that helped europe regain its strength. and pioneered the atm, so you can get cash when you want it.
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it's been our privilege to back ideas like these, and the leaders behind them. so why should our anniversary matter to you? because for 200 years, we've been helping people and their ideas move from ambition to achievement. and the next great idea could be yours. ♪ and the next great idea could be yours. are you still sleeping? just wanted to check and make sure that we were on schedule. the first technology of its kind... mom and dad, i have great news. is now providing answers families need. siemens. answers.
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cnbc is heading to a town haul next business in atlanta. if you are a viewer that wants to be part of our viewing audience, contact us. i'm bill griffeth, coming up at the top of the hour on "closing bell," verizon is ending its unlimited data plans. bad news for consumers, good news for shareholders? is that the scenario? we'll look at both sides of that. plus, have you heard about this company called facebook that's about to go public tomorrow? we have full coverage of the pricing once it happens after the close tonight. and we'll hear from one top
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technology analyst who says he wouldn't buy the ipo with his own money much less yours. plus, it's obvious a bet on facebook is really a bet on mark zuckerberg. is that a good thing for shareholders considering he owns majority of facebook's voting shares? we will look at that coming up at the top of the hour on "closing bell." sue herera is with me today. first, mr. jeopardy himself, david faber, has breaking news on hewlett packard. >> thanks, bill. we can confirm stories that have been reported elsewhere that hewlett packard is on the verge of announcing significant layoffs in is ranks. we're talking about a company that has roughly 325,000 employees. sometimes we forget facebook may end up being larger market capwise, but it's got a long way to go to get anywhere near that. meg whitman the ceo who took over in october has been sending signals about the real possibility of job cuts though she would not attach any numbers to them. and not really speak to them. the last time we had meg on
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during last quarter's earnings, again, she gave a sense of this as a real possibility given what were efficiencies they've been looking for. those who expect as many as 25,000 to perhaps even more, 8% to 10% of the overall work force of the company should not assume that that is all going to go right to the bottom line. sources tell me to expect that there will also be discussion of re-investment of some of the savings of no longer having that many workers at the company. the company is also been targeting processes and different things associated with how it does business in order to save money that are separate from reducing the head count. but all of this is expected to be announced within a week. hewlett packard will be announcing earnings after the close next wednesday. and i'm told at least by sources that it is likely -- likely to announce the significant job cuts along with those earnings. though of course those things can always change. so we can confirm, again, a number of other reports out there involving hewlett packard,
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which is in the midst of a turnaround, bill, that is going to go on for quite some time. but we are starting to see significant decisions made when it comes to head count at the company. back to you. >> yeah, david, it's a good point you make. i think a lot of people forget, although apple is likely to overtake them this year, hewlett packard is the largest technology company in the world by sales as of the end of last year. but revenue has declined from two years ago. net income has declined from two years ago. this is a bo hee moth that looks like it will get smaller. >> it is going to get smaller no doubt. but you're right. it's an important point to raise, brian. it's a behemoth, the former ceo has been criticized at least by current management occasionally although not publicly, for cutting to the bone. i think they are going to make a key point of saying we're not cutting just to send everything to the bottom line and exceed an earnings number, we're going to be cutting so we can re-invest in areas of this company that were starved in terms of r & d.
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>> david, thank you very much. >> the playoffs continue with the devils and rangers battling it out to see who advances to the stanley cup finals. they are tied after a 3-2 devils win last night. our own darren rovell goes behind the boards to see what it takes to get madison square garden ready to drop the puck. >> for an 8:00 p.m. game time, the crew at madison square garden gets an early start. 1,200 daily workers stocking snacks and filling merchandise shelves that will serve more than 18,000 fans. the centralized beer system serves more than 60 of the arena's concession stands through 38 miles of tubing. during a playoff game, the garden sells about 25% more food, drinks and merchandise than during the regular season. four hours to game time, the technical crew preps the equipment, rehearsing every graphic and video that appears on the scoreboard. the arena's organist even
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practices the "let's go rangers" tune. with an assist. on the ice. zamboni does its first run of the day. it will smooth the ice seven times throughout the night. the maximum speed, 7 miles per hour. 90 minutes to faceoff, a 0-person security team goes over last-minute details. meanwhile, the team loosens up in a pre-game soccer match in the garden's back hallways. at 7:00 p.m. sharp, the gates are open and the blue shirt faithful pour in to cheer on the home team. you know, i never realized they practice this like a live show every single -- i mean, there's directors and guys up there. it's so much power when they say lights down. and it goes -- lights up. the pyrotechniques and everything. i can't imagine pushing that
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button in madison square garden. >> shout out to them. you see what they're doing to the staples center in the next couple days? they have to go from basketball to hockey. >> there will be 250,000 people coming through the staples center staples center and l.a. live, and 100 million people watching. >> big shout out to the women and men behind the scenes who get it done. >> it's amazing. due appreciation. we have a housing market related flash now. >> the housing sector index having its worst day of the year. lennar is a perfect example, down more than 6% for the day. but you also have to keep in mind the run-up these stocks have had as we've seen some better gradual numbers in housing. still up about 40% year to date, but housing across the board getting thumped. and also, guy, i want to point out on ravel, before the end of the cold war, no hockey team wound up playing soccer. now at every level of hockey, any team with a european, that's what they do in every rink of north america. >> because your bruins aren't in
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it, you're going to dump on the rangers? >> no, i'm saying that's what they do to warm up now. and 20 years ago they didn't. >> call me by my new name. >> i'm adding value, or at least trying to. >> adding value. >> thanks, brian. up next, call it the hidden airfare hike. new numbers on the reservations change fees and fees that used to be free like checked bags and oxygen. nobody likes them. but could we live without them? could airlines survive without them? we'll debate. [ laughter ] ♪ [ female announcer ] each one of us is our own boss. ♪ and no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. ♪
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airline stocks on a considerable pressure today, though it is worth noting the year to date. delta is up 30%. united continental up 18%, while us airways is up more than 100%. and also keep in mind that big drop in crude, therefore jet fuel prices is a fill-up as well. >> why are they down when oil is down? now is supposed to be net profit. anyway, new numbers on all the airline fees we do not like. reservation change fees are soaring, but passengers are beginning to get wise to the checked bag fees. let's check in with george hobiken, president of airfare george, first off, to these fees. spirit has gone over the top on
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all of them as far as what you're charged to carry on a bag. how bad is it going to get? how much more can airlines charge for just everything? >> well, yes, spirit and charge for carry-on. there is some question whether more will adopt that. some charge using a credit card for lap children, even on domestic flights, and even for talking to a live agent at the airport. >> i mean it's incredible, phil. which airlines are the worst offenders in terms of loading up on all of these fees? and i guess the next question would be, does it actually benefit their bottom line? do all of these extra fees translate into better profit? >> it does make them more profitable. you look at the airline profits, and they would not be where they're at right now if it weren't for these, what they're called ancillary fees, these reservation fees, the bag fees. and in terms of who are the worst offenders, it depends on what you mean by worst offenders. who brings in the most money? delta brought in the most money
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in terms of baggage fees last year, but that's simply because they're flying so many passengers. i do agree with what our guest was saying, we're going to see more and more of these fees in the future. they're going to push it as far as they can until people push back and say we're not going to pay for that. and then at that point they'll see say we're not going to charge for that. >> you know, george brings up a good point. people moan and groan about the fares. it's cheap to fly i from new york to l.a. coach. the airlines have got to survive. they've got to make money somehow. what do they expect? >> absolutely. even with the fees, the profit margins are razor-thin compared to other industries. i think we could see more bankruptcies when it comes to these fees. the problem is when airlines attempt to raise fees people stay home or drive. what the airlines have figured out, have a low fare, entice them to fly and then hit them with the fees. people overpack anyway.
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i don't think it's necessary to pay bag fees there is a site called one which will teach your viewers how to pack light. it's not necessary to bring 18 pairs of shoes or that many pairs of underwear when you travel. >> okay, to both of you, george and phil, thank you very much for joining us. i know some airlines even charge for using the bathroom. it's just getting a little out of control. yeah, seriously. >> do they really? >> i have not flown that airline. >> do not drink very much on that flight is all i'm going to say. bottom line, a little bit of a tip for you. >> all right. thanks for watching "street signs," everybody. >> "closing bell" is coming up next. see you same time tomorrow. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers
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into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. solutions that matter. [ male announcer ] sustainable solutions. or creates another laptop bag or hires another employee, it's not just good for business,
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